While Norway built a $2 trillion fund, the UK squandered its North Sea windfall.

The United Kingdom has oil in the North Sea. But it chose not to think about this resource in the long term, treating it as a temporary source of revenue rather than an opportunity to build lasting wealth. Already in the 1970s, it was clear to some economists that North Sea oil represented such a unique opportunity.

In 1974, Gavin McCrone, a senior economist at the Scottish Office working for the British government, prepared an internal report for ministers in Westminster. The report assessed the economic implications of North Sea oil for an independent Scotland and concluded that the revenues were far larger than previously estimated. McCrone warned that this windfall represented a historic opportunity for lasting prosperity, one that could transform public finances if properly managed. The report remained classified for 30 years. When it was revealed in 2005, it became clear what a strategic mistake it had been to ignore its proposals.

Such a mistake is visible in Norway, which chose to manage its oil revenues in a completely different way from Britain.

Despite energy prices rising following instability in the Middle East, Prime Minister Keir Starmer’s government has adopted a contradictory policy. It restricts new oil and gas exploration in the North Sea while maintaining one of the highest tax burdens in the world on the sector. The tax on energy profits approaches a total of 78%. Energy bills have risen significantly since the Labour Party took office and are forecast to increase by a further 18% in July.

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